Rural India: Propelling the Indian economy during

COVID-19
Neha Chauhan
Source: WARC Exclusive, Spotlight India, August 2021
Downloaded from WARC

Arc Worldwide’s Neha Chauhan examines the many ways that rural consumers are driving the Indian
economy with their needs and aspirations during the COVID-19 pandemic.

Indian migrants returning to their homes jobless during the pandemic triggered a change in rural
consumer behaviours.
As a result, the lady of the house assumed the role of the secondary provider, thus becoming a
strong influencer.
With limited cash, the household’s needs and the prioritisation of spends are now weighted from a
woman’s lens.

This article is part of a Spotlight series on rural marketing in India. Read more

Why it matters
Multiple behaviour changes have been identified among India’s rural consumers due to the pandemic, driven by
four major purchase shifts in household structure, cash flow, needs and aspirations.

Takeaways
The pandemic has changed the woman’s role, in a tectonic shift impacting and shaping behaviours in rural
households.
Marketing to women must be relooked to view them as an influencer in categories not previously seen as
their domain.
The impact is seen in categories such as health and hygiene, mobile phone use, e-commerce and two-
wheeler autos.
India’s rural ecosystem is no different from the rest of the country when it comes to battling the disruption caused
by the COVID-19 pandemic, with the cautious but agile rural consumer evolving at a pace no one would have
imagined. From championing the sales of the motorcycle segment to competing with their urban compeer for
e-commerce, the rural consumer is propelling the Indian economy in many ways.

The reasons
The world witnessed the greatest migration of people during the early months of the pandemic, when
Indian migrant labour was forced to return to their rural homes jobless. This triggered a change in the rural
consumer’s behaviour almost overnight when the lady of the house emerged as a strong influencer, elevated to
the role of a “secondary provider” in order to support her family battling forced unemployment.

With this change in role of the “nurturer” came the “prioritisation of spends” on purchases, given the limited
cash inflow. The needs were now being weighted from the woman’s lens and this resulted in a major shift in the
“hierarchy of cash flow” within the rural household. Amid the confusion and terror of the unknown, and the
urgency to acquire relevant information, the focus shifted to income-boosting spends while cutting back on
indulgence and diverting the savings towards hygiene products for the family. Other spends on smartphones,
data, new two-wheelers etc. saw a spike despite the impact of the pandemic as these spends were seen as a
means of information, earning, education, skill development or job-aiding travel.

Given the relatively weaker health infrastructure compared to urban areas, coupled with unemployment, the
mindset of rural households is shifting towards financial planning in order to safeguard their future. Today, the
health and wellbeing of the chief earner is at an all-time priority and rural homes are seeking to invest in financial
and medical solutions, making large markets available for the BSFI segment.

It can be said that the evolution in the woman’s role has resulted in a tectonic shift that has impacted and
shaped various behaviours in rural households today. Emerging as a new powerhouse, marketers should relook
how they have marketed to women and also see them as a major influencer in categories not previously
considered their domain.

Key customer trends impacted by the tectonic shift

Health and hygiene

Health and hygiene are the compromised aspects of rural India and have been the focus of FMCG brands for
decades. Brands have constantly endeavoured to sensitise the rural consumer on the subject through various
campaigns, for example HUL launched Help a Child Reach 5 and Haath Munh Bum, while Horlicks ran Horlicks
Sawathya Abhiyaan under the same premise year after year.

The effort was consistent but the change was slow. But this behaviour saw a major shift during the pandemic
with record-breaking growth of 165% for Dabur Chawanprash sales in rural India. Similar effects were seen on
sales of the essential personal care category, where the rural market contributed to a 47% increase in sales for
products like shampoo, soaps, handwash, face creams, shaving creams, detergents etc.

Also registering a pull from the rural markets was the pest repellent solutions category – spending more time at
home due to the lockdown grew the pest and mosquito repellent categories by more than 200%.

This sudden focus towards health and hygiene can be also attributed to the “nurturer” (responsible for the
health and running of the rural family household) and her influence on the rural household. This reiterates the
fact that it is critical for brands to reconsider the role of the nurturer and mould offerings that hold value and
strike a chord with this new purchase influencer.

Mobile phone and data usage

One more noticeable change was the sudden spike in sales of entry level smartphones and the number of
rural internet users. The isolation created by the pandemic created a dire need to be connected with the outside
world in search of relevant information. This change saw India grow more rural internet users than urban,
clocking 13% growth to 299 million internet users (31% of the rural population).

The digitisation of rural India has been an ongoing process that saw an increased rate of adoption during the
pandemic. Mobile phones – previously seen as a status symbol and source of entertainment – have graduated
to be a key source of information, education and growth – an essential commodity for rural households.
A survey highlighted that using smartphones almost equates with use of WhatsApp, followed by 65% of
respondents being on social networking platforms.

The online rural customer has varied digital consumption needs, making it essential for brands to innovate in
order to be relevant for their customers. Vernacular, voice and video have emerged as the game changers for
the digital ecosystem, making the rural internet more inclusive and diverse. The 3Vs succeeded in fulfilling
different consumer group needs, maximising screen time and the adoption of different digital platforms and
services.

Marketers should consider and leverage digital platforms not only as reach mediums but also as an integral
brand building chassis for their rural audience.

Example: Airtel collaborated with a leading OTT that offered the maximum range of vernacular content – Zee5.
The idea was to tap into the vernacular customer base by offering Zee5 content at zero cost but the challenge
was to reach the already online rural customer.

Once again, Airtel deep dived into the regional needs and demands and identified an opportunity to collaborate
with HelloEnglish, the largest online English learning platform available in 24 vernacular languages and with
high penetration in Airtel’s core markets.

Zee5 was placed as a module in the app. With HelloEnglish, Airtel also launched its first ever Voice-Bot Led
Speaking Game that had Airtel's brand ambassador's Avatar integration as a voice-bot (vernacular) to converse
in vernacular languages with the potential subscriber while highlighting the Zee5 offer. This helped build positive
brand perception, higher engagement and switch – 7.5 million non-Airtel users were reached during the
campaign and the MyAirtel App downloads increased by 40%.

E-commerce

Despite being on a shoestring budget, it was noticed that the new rural customer demands were shaping an
emerging and promising market segment - rural e-commerce. The wave of digital adoption had started earlier
in the country with Jio slashing data costs by 93%. But adding to this wave was the pandemic, when Tier 2, Tier
3 and below customers were confined to their homes and forced to purchase the limited products available at
the local retail. This triggered the need to seek new shopping avenues. Encouraged by multiple factors like
vernacular content, rising adoption of digital payment, and faster and timely deliveries, the curious rural
customer eagerly adopted social commerce.

Last year’s festive season surpassed all records for major e-commerce players in the country. This major spike
can be attributed to the desire to achieve needs and aspirations despite the pandemic. The younger population
of the Tier 2 and Tier 3 towns has proven to be open to experimentation and responds well to discounts and
offers, thereby maximising perceived value of purchase. E-commerce giants sensed this pent-up demand,
muscled up their logistics and network to reach pin codes where they had never tread before. The industry
witnessed technological adoption in months when it would usually have taken years.

Currently, Tier 2 and beyond cities are contributing to around 66% of the total online consumer demand in
India. Flipkart’s Big Billion Day sale witnessed a whopping 52% increase in visits from Tier 3 cities and
beyond; Paytm Mall also saw a 2X increase in the number of users from Tier 2 and Tier 3 towns. Meanwhile,
Myntra saw a 180% increase in new shoppers from Tier 3 cities.

Marketing and social media tricks used by e-commerce giants also captured the interest of rural customers. For
instance, Myntra partnered with YouTuber Bhuvan Bam to create an impact in small towns in India. Nykaa, on
the other hand, took its offline marketing efforts online through exclusive digital masterclasses and expert-led
online beauty bars.

Using regional faces, content and languages have shown growth spurts for e-commerce companies like Zomato
and Swiggy. With emerging cities contributing to 40% of the business, Zomato announced starting operations in
500 new Tier 2 and Tier 3 cities in India. Swiggy too has made inroads in over 290 Tier 2 and Tier 3 cities.

The rate of social commerce adoption in rural India has clearly highlighted the increasing potential of the
platform and the aspirational appetite of the consumers. With “high perceived value” key to winning over rural
digital consumers, “Collaborations” (with offers/services/local influencers) could be the next possibility for brands
to explore for onboarding the rural masses.

Two-wheeler autos

While the urban markets were still grappling with the high number of COVID-19 cases, the then comparatively
less impacted rural and semi-urban markets have enabled sequential improvement in sales, resulting in a
general recovery for the entire industry.

The industry fell heavily in Q1 (-24.5%) and Q2 (-72.2%), before recovering in Q3, when sales slipped only
3.9%. Finally, Q4 saw double-digit growth, with October +16.9% YoY, November +13.6% and December
+32.5%.
“Entry level” was the most resilient segment in 2020 for both motorcycles and scooters, as the focus of the rural
household shifted towards safeguarding health and income of the family (a two-wheeler provides
independent mobility and is seen as aiding income). Another interesting aspect that also surfaced was that
Japanese automakers had ceded their market share to their Indian counterparts. This win can be connected to
the deep penetration of Indian companies in rural markets with a large portfolio of entry-level offerings.

The performance of the two-wheeler industry reinforces the fact that rural consumers have the spending power
but need to see immense value and need before purchasing.

Need perception dictating sales growth

Rural consumers today are deliberating on each penny spent as the pandemic has altered shopper behaviours
and new consumption trends have surfaced. While health and hygiene products have seen record sales, there
are some categories that have suffered due to their low perceived need.

With consumers confined to their homes, demand for traditional beverages like tea and coffee has grown by
140%. A similar trend was the 83% growth seen for snacks like chips, biscuits and namkeens. However,
additives and packed food such as ready-to-cook, spreads, chutney and flavored juices etc. saw a sharp drop
across states as these are considered to be an indulgence and not a pressing need.

It was a similar fate for certain products in the personal care category. With the need for health and hygiene
products at an all-time high, consumption of shampoo, shaving cream, facewash, toothpaste etc. grew by more
than 47%, while the grooming category suffered a fall of 70% as items such as talcum powder, lotion, cosmetics,
scrubbers etc. lost their position.

ARC_SPECTIVE:
Apropos above, multiple behaviour changes have been identified in rural households due to the pandemic. The
effect of these changes has been logged by sales numbers declared by brands across categories. These
changes in behaviour can be mapped back to four major purchase driver shifts.

Structural shift: Women (nurturer) today are important contributors to the rural household income and are
driving spending decisions. The prioritisation of spends on health and hygiene, income generating services and
products versus consumption goods can also be connected to this structural shift noticed in rural India.
Shift in hierarchy of cash flow

The pandemic and social media influence, coupled with women taking on stronger roles in rural households,
have influenced, shaped and redirected cash flow for the new needs, demands and aspirations:

Health, hygiene, information and financial security are now in the spotlight
Income generating spends are rising

Needs shift: The pandemic has made the rural households very proactive. The value-conscious rural customer
has become need-conscious and this shift can be witnessed by the different sales figures across categories.
The focus has shifted towards slowing premium-isation as spends get diverted towards information, health and
hygiene, financial security, education, skills, mobile phones and data.
Aspiration shift: Smartphones are now the medium of entertainment, knowledge and information for the rural
community. Social media adoption of e-commerce has shaped new consumers’ aspirations and demands.

Increase in FMCD
Increase in e-commerce shopping
Demand for platforms like Swiggy and Zomato
Experimentative younger consumers drawn to discounts and offers

Acing rural India for marketers

The mass TG has evolved rapidly and today holds a sizable digital footprint on social media and other platforms.
This shows merit in integrating digital engagement across channels or providing digital solutions to delight the
mass rural customer. The growing number of internet users in Tier 2 and 3 cities, and Indian language content
apps have also witnessed growth. These consumers are also mobile-first users, restating that ideas should be
based on the proven vernacular, voice and video strategy. Marketers should keep the lower bandwidth
connection and tech savviness of the consumer in mind while creating greater experiences.

Curious but cautious rural consumers seek maximum value in all their spends; offers and sales have caught their
eye but they continue to seek more. Social media has shaped the aspirations of the rural consumer, making it
imperative for marketers to look at strategic collaborations as key to bring more value.

Increased physical as well as mental reach to win rural consumers’ loyalty has become essential. Leaning on
vehicles of trust should be a vital part of an outreach program. Marketers should create credible brand
ambassadors for themselves by partnering with local influencers – teachers, doctors, panchayat head, retailers
etc.

Like rest of the nation, the pandemic has affected the rural customer emotionally and psychologically. Therefore,
there is merit in the marketer shifting from customer-centric communication to human-centric communication.

Further reading
Bharat Rising: Reconnecting with the soul of India

Influencer marketing: Looking beyond the metros

Rewriting the sacred tenets of rural marketing in India

Success in rural India requires understanding and a relentless pursuit

How brands can empower India’s farming communities

Networked commerce and the power of India’s kirana

Revenge of the Walking Scarecrow: Seizing the Winds of Change in Rural India

About the author

Neha Chauhan
Brand Strategy Partner: Experiential & Shopper Marketing, Arc Worldwide

Neha leads insight and data-based brand strategies that land perfectly to solve unique brand problems and has
advised brands such as Gulf, Mondelez, GSK, Amazon Easy, ABInBev, JSW, Colgate in domains like urban and
rural activations, contact programs, touchpoint activation, events, MICE and mela marketing. She also mentors
young talent, moulding them into tomorrow’s strategists.

Read more in this Spotlight series

Post-pandemic challenges and opportunities in rural India
Biprorshee Das

Brand in action: How Parle Agro plans marketing strategy to keep rural India in mind
Nadia Chauhan

The rural ways of buying: An opportunity to reimagine digital

Shraddha Ganesh

After COVID: How to realise the potential of rural markets

Sunny Vohra, Aparna Tandon and Pallavi Patil

Future success: Investing in rural India

Mohit Joshi

COVID-19 and rural India: The challenges and opportunities for marketers
Sharad Varshney

No magic bullet: Rural marketing in a post-COVID world

Anand Murty

Game changer: Technology and the rural market

Amit Rangra

Challenges and opportunities: How brands can succeed in rural India

Amit Bhandare

Sales, service and social impact: Mitigating COVID’s effect on rural India
Sriharsh Grandhe

Rural marketing in a post-COVID world: Consumer sentiment data

Spotlight data report
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